Bangladesh’s foreign exchange reserves stand at 30.87 billion US dollars.
This information was given in a press release of Bangladesh Bank on Sunday (August 24).
However, according to the International Monetary Fund’s (IMF) Balance of Payments and International Investment Position Manual (BPM-6) methodology, Bangladesh’s net reserves are currently 25.87 billion US dollars, the notification stated.
Net or actual reserves are obtained by excluding short-term liabilities from total reserves. However, apart from this, there is another calculation of Bangladesh Bank’s reserves, which is expendable reserves. The central bank does not officially disclose this information. There, usable reserves are calculated by excluding dollars in the SDR sector of the International Monetary Fund, foreign currency in the foreign currency clearing account of banks, and Akur bills.
The country’s foreign exchange market has regained its composure as the two main sources of foreign exchange earnings—repatriation earnings and commodity exports—continue to maintain a positive trend. This has eased the pressure on the reserves that had been prevailing for a long time. The situation is becoming more stable as Bangladesh Bank has not sold dollars from the reserves for 10 consecutive months.
Meanwhile, billions of dollars in foreign financial assistance, including budget support and loans, are flowing into the country due to reform measures in the country’s banking sector, revenue administration, and macroeconomics. This is gradually increasing foreign exchange reserves.
On the other hand, as import costs are controlled and exports and expatriate income increase, the demand for dollars has also decreased. As a result, the exchange rate of the dollar against the taka has recently decreased slightly. However, to ensure that the dollar price does not fall excessively, Bangladesh Bank has been buying dollars from commercial banks through auctions this month.
Bangladesh Bank’s reserves reached a peak of $48 billion (48 billion) in August 2021. At that time, due to unprecedented money laundering by influential individuals of the Awami League government and the increase in import costs in the post-Covid-19 period due to various global and domestic reasons, foreign exchange accumulation (reserves) came under great pressure. Bangladesh’s current account deficit also increased continuously due to a large trade deficit. As the taka continued to depreciate against the dollar, it affected energy prices and imports. To meet the crisis, the central bank started selling dollars from the reserves. As a result, the reserves gradually fell to the bottom. At that time, Bangladesh applied for a loan of $4.7 billion from the International Monetary Fund to increase its foreign exchange reserves.
The then Awami League government sought this loan assistance from the International Monetary Fund mainly due to a large current account deficit, depreciation of the taka, and dwindling foreign exchange reserves.
